CAISO launches initiative that could lend support to struggling generators

CAISO launches initiative that could lend support to struggling generators

Thanks to flush hydro reserves and an ever-expanding base of variable solar generation, the California ISO is experiencing more bouts of negative pricing and resource curtailment this spring than ever before.

Those conditions are sparking concerns that generators may not be able to make sufficient revenues to stay online. The La Paloma plant is often offered as Exhibit A — the plant filed for bankruptcy in December 2016, citing an “inhospitable regulatory environment.”

The issues surrounding that closure are now the subject of a new initiative at CAISO, labeled Temporary Suspension of Resource Operations.

In an issue paper launching the program, CAISO officials explain that in May 2016, La Paloma filed with the grid operator for multi-month outages at several generating units, expecting they would not be economic to operate.

CAISO denied the requests because its Business Practice Manual rules only allowed for extended shutdowns due to physical issues like new construction or maintenance. The plant owners appealed to FERC, which sided with CAISO, ruling that its tariff rule “does not permit CAISO to grant requests for outages for economic reasons.”

During the FERC case, CAISO agreed to open a process to consider whether it should “allow for economic outages and compensate generators when it denies an outage for a non-resource adequacy resource.”